The Cuba market is just fantasy

The Cuba market is just fantasy

Industrialists and merchants were obsessed with the ’China Market’ at the end of the 1800s. Gaining access to that market was the holy grail of economic exchange and foreign policies were driven by the ‘China Market’ fantasy, writes Dr Joseph S. Tulchin.

It was called the Open Door Policy in the US and the strategic concept of access to markets and resources drove American foreign policy for the next century. European powers used military and economic leverage to make room for themselves on Chinese territory. Today the ‘China Market’ is not a fantasy. It is real.

Now there is another fantasy agitating the press - the ‘Cuba Market’. Commentators around the world have trumpeted the significance of Cuba and the United States resuming diplomatic relations since the move was announced on December 17, 2014.

Producers of agricultural equipment have been the most enthusiastic, with travel agencies close behind. And in sport there are articles about the baseball talent simply waiting for visas to the US so they can star in the major leagues.

Talk about fantasy.

How about a note of realism or caution.

There are three major obstacles to any radical transformation of Cuba in the immediate future.

First, real tourism and investment from the US requires changes in the embargo and that requires congressional action. Such action is unlikely unless the Cuban-American community demands that their elected representatives change their stance on dealing with the Cuban government.

The second problem is that the Cuban government has not changed. It is still an authoritarian regime which censors discussion, limits access to information, and puts dissenters in jail. US President Barack Obama’s administration is convinced that renewing relations will force the Cuban regime to become less repressive and create more space for dissident groups operating today under close government surveillance.

That is bound to happen sooner or later. When Cuba’s President Raul Castro goes, he will take an entire generation with him. Will the successor generation of the Communist Party be willing to share power? The model they are following currently is the Communist Party of the People’s Republic of China. That’s a little more open, but not much. And, human rights violations are more visible and more criticised in the Western hemisphere than in China’s region.

The third problem with the Cuba Market fantasy is the size of the Cuban economy. The 2013 per capita income in Cuba was US$6,288. The collapse in oil prices has left Cuba’s Venezuelan benefactor unable to maintain a flow of cheap oil to Cuba. This will depress GDP.

Assuming the US lifts its veto on World Bank and IMF loans to Cuba, there may be enough capital to buy all the things the Cubans need. But can the Cubans pay for it all?

Cubans are convinced they are the most entrepreneurial people in Latin America, and the island will become prosperous and a leader in the hemisphere once the embargo is lifted. But the entrepreneurial zeal of Cubans can be liberated only by opening space for economic and political activity. And that brings us back to politics.

Related report:

About time for US and Cuba to shrug off Cold War

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